Alexander has turned prominence to wealth Easy money: GOP candidate has racked up millions of dollars from honorariums and investments, despite his efforts to portray himself as the guy next door.

Campaign 1996

February 19, 1996|By This story reported and written by Carl M. Cannon, Gary Cohn, Scott Shane and Kate Shatzkin

When Lamar Alexander stopped in Baltimore a year ago on his quest for the presidency, he was asked why he had accepted $232,000 merely for stepping down from the board of Martin Marietta Corp. when it merged with Lockheed Corp.

After all, an ordinary aerospace worker might not earn that much in six years of full-time work. And even as the former Tennessee governor and other top company officials were reaping their payoffs, 12,000 workers were losing their jobs.

Yet Mr. Alexander shrugged off the question.

"It is the amount of money that I would have been entitled to whether I stayed or whether I went," he said.

Mr. Alexander's aplomb at receiving such a windfall may be an acquired habit. For years, he has shown an uncanny ability to turn a modest investment or even more modest effort into a handsome fortune.

His stump speeches stress his experience as an "entrepreneur," his work in the "real world," his status as an "outsider." He has turned a checked shirt into a symbol of salt-of-the-earth populism.

But the red-and-black flannel shirt is campaign camouflage, a disguise for a man who earned more than $1 million in 1994 with no real job, one who has long inhabited a world of money and power unimaginable to ordinary working Americans.

For 20 years, Mr. Alexander has moved profitably between the business and political realms of Tennessee. The Republican attorney has mixed with those who turned their wealth into political influence, and he has himself converted political prominence into wealth.

The rewards

The rewards have taken various forms: consulting jobs, director's fees, speaking honorariums, stock options, investment deals. No one has suggested that he sold favors while in public office. During and after his service as Tennessee governor, president of the University of Tennessee and U.S. secretary of education, what he offered to ambitious entrepreneurs was the invaluable blessing of a big-time politician.

"It's obvious Lamar has traded on his former position as governor," says Lloyd C. Daugherty, chairman of the Tennessee Conservative Union and a veteran Republican activist who has long been critical of Mr. Alexander. "Nothing else explains these sweetheart deals."

As the polls have transformed him in recent days from long shot to contender, his lucrative deals have drawn intense media scrutiny.

Last week Mr. Alexander bristled at comparisons to Hillary Rodham Clinton's controversial commodities investment, in which $1,000 invested with a well-connected friend brought a profit of $100,000.

He tried with little success to distinguish between his deals and Mrs. Clinton's before retreating to a generic defense.

"I plead guilty to being a capitalist," he said.

The evidence for Mr. Alexander's distinctive brand of capitalism has been gathered by Tennessee state investigators, a U.S. Senate committee and reporters in Tennessee and elsewhere.

Although the facts have been widely reported since 1991, they are attracting broad public attention only now that Mr. Alexander appears to have a reasonable shot at the Republican nomination.

Among Mr. Alexander's more controversial financial arrangements:

* The newspaper: In 1981, as governor, Mr. Alexander was one of seven well-connected Tennesseans, including then Senate Majority Leader Howard H. Baker Jr., who acquired for $1 apiece an option to buy the Knoxville Journal. Instead the group brokered the paper's purchase by the Gannett Co., receiving Gannett stock and options to buy more shares in return. Mr. Alexander eventually sold his stock for $620,000.

* The prison corporation: In 1985, Gov. Alexander proposed a sweeping program to privatize Tennessee's prisons just months after his wife, Leslee B. "Honey" Alexander, had invested $10,250 in the Corrections Corporation of America. To avoid charges of conflict of interest, she swapped her stock for 10,000 shares of a life insurance company, which she sold in 1989 for $142,000.

* The child-care venture: As he left the governor's office in 1987, Mr. Alexander helped found Corporate Child Care Inc. to organize on-site day-care centers at workplaces, investing $6,605 with his wife in the new venture. His latest financial disclosure form estimates the stock's value at $1.1 million, or more than 150 times more than the Alexanders paid for it.

* The Whittle deals: In 1987, Whittle Communications, founded by Mr. Alexander's close friend Christopher Whittle, paid him $125,000 in consulting fees and gave him a $10,000 stock option. Mr. Alexander's $10,000 check was not cashed -- a secretary reportedly mislaid it -- until Mr. Whittle had sold part of his company for $185 million. Then Whittle Communications bought back the stock for $330,000 from Honey Alexander, to whom Mr. Alexander had transferred it. It was a gain of 3,200 percent in less than a year.